Rupert Murdoch has said he is "shocked" and "embarrassed" after extensive salary cap fraud was uncovered at an Australian rugby league team owned by his News Corporation.

Murdoch also rejected claims of negligence against his Australian subsidiary News Ltd after they failed to detect the malpractice at Melbourne Storm. The club, which had exceeded the salary cap by more than £960,000 over five years, have been stripped of their 2007 and 2009 NRL titles, fined heavily, ordered to repay prize money and banned from accruing any points during the 2010 season.

"No. I don't think we [were negligent] and we're far from sure that we're the only club involved," Murdoch told a news conference called to discuss one of the biggest scandals in Australian sports history. "But we were shocked."

News Ltd has a 50% stake in the NRL competition and owns Melbourne Storm, but the breaches were blamed on administrators inside the club. "We didn't enjoy it, it was very embarrassing but it certainly was not us," Murdoch said.

The NRL chief executive, David Gallop, was scathing of the Storm's financial dealings. "They had a long-term system of effectively two sets of books and the elaborate lengths they have gone through to cover this up has been extraordinary," Gallop said.

Murdoch said the company took "immediate action" once it discovered the bookkeeping irregularities, but he said he wasn't in a position to speculate on the company's position as owner of the club and half owner of the league. "I'm afraid I'm a bit too far removed, I don't know enough about it," Murdoch said.

The Storm's president resigned after the breaches were announced and sponsors have deserted the club, casting doubt over its future in the league.

The revelations renewed debate over the NRL's £2.46m salary cap for each club this season which was designed to create a fair competition by preventing the wealthiest clubs from contracting all the top players.

In the NRL's biggest previous salary cap breach, the Canterbury Bulldogs were in first place in 2002 when they were stripped of their competition points and subsequently finished last.